Zeal Network, an online provider of lottery products, experienced a substantial increase in marketing expenses but still managed to achieve income and earnings growth in the first nine months of the year. The company raised marketing costs by 27% to €30.7m during the year to 30 September, due to the Eurojackpot and Lotto 6aus49 draws hitting their maximum jackpot on five occasions.

Despite the increased expenses, Zeal remained on track to hit financial targets for 2023 as it significantly increased billings and revenue. The marketing splurge also resulted in gaining 518,000 new customers through the nine-month period. Zeal’s billings grew by 16% to €633.2m and revenue increased by 16% to €86.0m in the first nine months of 2023. The group’s gross margin was close to the previous year’s figure at 12.5%.

Zeal also welcomed €1.2m from its new online games offering which launched in June 2023. The company now offers 28 games on the Lotto24 and Tipp24 platforms.

Even with the increased investment in marketing, EBITDA increased by 5% to €23.2m. However, the after-tax result for the period fell to €10.1m from €12.1m last year due to a €1.1m decrease in the financial result and a significant increase in tax expenses compared to the previous year.

Raised marketing costs, including investment in brand-building through increased TV advertising, meant the acquisition costs per registered new customer was up 27% year-on-year to €46.81. Personnel expenses grew by 9% to €15.2m, and the average number of employees rose from 159 to 170.

Zeal’s average number of employees rose from 159 to 170, and the company continues to plan to expand its market leadership as an online provider of lottery products and introduce new products, including additional online games. For the Germany segment, Zeal anticipates billings from lotteries (excluding games) in the range of €800-830m, assuming an average jackpot development. Zeal also expects revenue in the 2023 financial year to be between €110-120m and EBITDA to be in the range of €30-35m. The company also expects to invest significantly more in new customer acquisition compared to the previous year and anticipates marketing expenses of €34m to €39m.

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